The Kickstarter team has helped $130M go towards 17,000+ projects. Click to see one of the coolest team pictures ever.

Five hundred years ago, most Western artists lived off the charity of wealthy patrons. Today, you are that patron, and with Kickstarter you’ll be funding a lot more than just art. The Manhattan based company, not quite three years old, works as an online network to match worthy projects with crowd-based funding. On Kickstarter an artist, advocate, or even engineer will post a call for help, often with a video detailing what they want to do and how your money will be used. Almost anything is fair game, from putting on a rock concert to designing a better iPad keyboard. Every visitor to Kickstarter decides on their own which project, if any, they wish to help fund and how much they want to give. Through word of mouth and internet buzz, Kickstarter has helped 17,000+ projects succeed, raising more than $130 million in pledged support! Almost $100M is from 2011 alone. Kickstarter’s growth is phenomenal, and they are expanding into realms many may have thought beyond the reach of crowd-sourcing. 17 films at the Sundance Film Festival (about 10%) were funded on Kickstarter. Two projects have nearly broken the million dollar barrier. Increasing numbers of projects feature high-tech devices that are more commonly found at startup incubators than community supported websites. Kickstarter is making an impact not only in the lives of artists and patrons, but in the very industries those participants come from. This flourishing network is a prime example of the delightfully disruptive power of crowd-sourcing…and it’s just getting started.

Everyone from the Red Cross to Radiohead has turned to the internet to raise money, but Kickstarter is a little different. They ask as much from their project leaders as they do their donors. Their philosophy of crowd-sourcing seems to have two major tenets: 1) patrons are consumers, and 2) when it comes to funding it’s an all or nothing game. The first part of their philosophy lends itself towards one of the best parts of donating money to Kickstarter – you get something in return. Every project offers various rewards for those who pledge different amounts of money. For a music show it could be a ticket to the event at $20, or a VIP pass at $100. When the project is aimed at producing a device, the rewards tend to function like pre-sales. Give them $50 now, and they’ll ship you a copy of the gadget once they get produced. In this manner, every pledge is kind of like an exchange. Backers offer money, and project leaders give either a token of appreciation, a valuable asset, or a one-of-a-kind momento depending on the pledge level. Leaders of the project determine the rewards offered, and are encouraged to make them as desirable as possible.

Most projects attract attention through a video that accompanies the project’s home page on the Kickstarter site. In 2011, 80% of projects had one. The following is a montage that celebrates the mixture of vision, charm, and insanity that one finds in Kickstarter fund request videos:

Once the pledges start rolling in, however, a project isn’t done proving itself. That’s when the “all or nothing” aspect of Kickstarter comes into play. Each project has a set amount of time (typically 30-60 days) to raise pledges. If they don’t meet their goal, the project will not be funded, and none of the backers’ credit cards (or PayPal accounts) will be charged. In other words, if a project decides they need $50k to put on a concert, they can’t walk away with $35k and do the best they can with the limited funds. It’s all or nothing. Either a project meets its goals (and backers are thus more likely to get their rewards as promised) or the project disappears and patrons can move on to find another (more successful) project to sponsor.

Between tantalizing rewards, and a system that doesn’t broker half-assed attempts, Kickstarter provides a kind of security to its potential patrons. Sure, any project may fail even if it reaches its funding goals, and some tech projects take much longer to enter into full production than expected (I’m still waiting for my video camera spy-glasses) but the Kickstarter system makes it more likely that money given to a project will yield a tangible benefit. Unsurprisingly, this quasi-reliability has attracted a lot of interest and a lot of money.

Justin Kazmark, one of Kickstarter’s 30+ employees and their PR guru, was able to walk through some of the impressive figures the organization has been able to generate. In 2011, $99M was pledged, up from $27M for 2010, bringing the total to around $130M. 27,000 projects were launched in 2011, of which about 11,800 met their goals. That’s up from 11,000 launched and 4000 successful in 2010. The project success rate stayed about the same, however (46% in 2011, 43% in 2010) and the overall number of successful projects has surpassed 17,000. For every dollar a patron pledges to a project that meets or exceeds its goal (and thus gets funded) more than 90 cents will reach the project’s coffers. 5% goes as a fee to Kickstarter and between 3-5% goes to Amazon to process payments. Due to unavoidable fluctuations in patron’s finances, not every pledged dollar arrives, but the average collection rate for successful projects is 85%, which is very respectable.

Of all the stats surrounding Kickstarter, however, perhaps the most impressive is the number of people who participate. There have been more than 1.25 million supporters! 200,000 or so of those have funded multiple projects. A few people go crazy, with the most prolific patron supporting over 700 projects! Even when not garnering pledges, project pages on Kickstarter generate some serious traffic – 30 million people visited Kickstarter in 2011 (up from 8 million in 2010), and media outlets regularly cover Kickstarter projects (Singularity Hub included).

Some projects have attracted so much attention and support that their success seems out of place. Tik Tok is a device that converts an iPod nano into a multitouch wristwatch. In 2010 it raised more than $940,000 from 13,512 backers – most as effective pre-sales for the device at $25 or $50. More recently, the Hidden Radio and Bluetooth Speaker raised almost as much money (~$938k) from just 5358 backers. Again, most patrons were pledging at levels where the reward was an advanced copy of the device. Kazmark says that these high levels of donations spread beyond tech gadgets which offer effective pre-sales. Dozens of art and design projects have surpassed the $100,000 mark. These include films, concerts, and much more. As more and more people learn about Kickstarter, the size of the projects it can handle grows as well, and the potential for multimillion dollar projects is here.

That’s both wonderful and strange as supporting a Kickstarter project is not like entering into an online marketplace. “It’s about getting behind a person not a product,” says Kazmark, “and we have to make people aware of that. We have to educate people. It’s a new experience. I’ve backed my own share of projects…it’s hard not to back some things. I just trust this person and that they’re going to do their best. Sometimes thing don’t go as planned. It’s kind of a cool place in between commerce and patronage. A space where we can test the idea before it happens.” The idea is certainly for there to be a value-exchange. Backers should be receiving valuable rewards for their patronage, and the system seems custom fit to offering pre-sales for gadgets (or tickets to concerts, etc). Yet there’s no receipt of sales, no guarantee. Kickstarter does its best to vet a project, and the project leaders are expected to do their best to fulfill their vision if their fund-raising goal is met. Transparency is encouraged at every step of the process. In the end, however, social pressure and community expectation are the only real safeguards when someone pledges money and expects a reward in return. There’s always a chance you could not get what you thought you were “buying” (did I mention the video glasses I’m still waiting for?).

Yet the money keeps flowing in, and Kickstarter’s influence is continuing to grow. Kazmark mentions that successful projects in games (perhaps especially app-based games), film, and comics may be transforming those industries. Why should a designer, author, or artist go through a major publishing house when they can raise funds on their own through Kickstarter? Most of what those established production companies can provide is seed-money and marketing, and Kickstarter is a way of crowd-sourcing both. With a grass-roots approach, artists can maintain full rights and royalties to their work and hopefully launch themselves into their careers. To Kazmark, this “creative independence” is the whole reason behind their work – “There’s value in the world beyond things that can make money.”

So now there are a growing number of filmmakers, game designers, comic artists and writers, gadget designers, musicians, and other creative types who know that they don’t have to go through normal channels to be successful. The crowd-sourced model is viable, respectable, and gives them a much better deal in many cases. It’s hard to understand where that trend may lead to in the long term, but it seems possible that it will lead to increased creative freedom and money going to individual artists, not producers.

There are other trends to consider as well. Singularity Hub has seen a growing number of tech projects which have raised impressive amounts of money from Kickstarter. Sometimes at very high pledge amounts – 10k or more from a single backer. At that level, one wonders if equity in a company shouldn’t be a reward offered. Up until very recently it was illegal in the US for businesses to crowd-source equity in that way, but a recent bill in Congress changed that (if you don’t mind some political slant, you can learn more here with a nifty video). Until such equity-raising crowd-funding becomes more routine, however, Kickstarter seems unlikely to participate in such exchanges.

Besides which, they have their eye on a different short-term prize. Kickstarter is gung-ho about expanding outside the US. While backers come from all over the world, every project requires a US driver’s license and bank account. That was to be expected at first as many Americans tended to equate online funding of offshore projects with email scams featuring Nigerian princes. Now, however, Kickstarter is ready to go international. Kazmark says the company will work to clear legal and administrative hurdles, reach out to creative types in new markets, and build interest and trust abroad. Within a few years Kickstarter could be crowd-sourcing projects in every corner of the globe. Expect the number of backers and dollars pledged to increase exponentially when they do.

As big as Kickstarter may get, however, it’s always going to come down to the individuals that conceive of and fund-raise for these projects. Every project on the site, whether it fails or raises a million dollars, is someone’s dream. Perhaps that’s a romantic way of looking at it, but the passion and hope is clear in so many of these projects. Perhaps this type of crowd-sourcing is becoming so popular because it sells that dream as well as it offers more tangible rewards. I’ll let you decide. Here are some of the most exciting, heartfelt, and enjoyable videos from 2011, as decided by the Kickstarter staff. I can feel my heart and my wallet opening: